Walter's Distributors Have a Cost of Equity of 13

question 72

Multiple Choice

Walter's Distributors have a cost of equity of 13.84% and an unlevered cost of capital of 12%.The company has €5,000 in debt that is selling at par value.The levered value of the firm is €12,000 and the tax rate is 34%.What is the pre-tax
Cost of debt?

• A)7.92%
• B)8.10%
• C)8.16%
• D)8.84%
• E)9.00%

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